Key issue: What strategy Resotech must choose??
Resotech a small company in the magnetic resonance imaging; has a cutting edge technology, high performance quality, enhanced value proposition to customer hospitals due to improvement in clinical practices, focused on R&D and innovation ; succeeded its first product in the high performance segment of the MRI market.
Nevertheless, Resotech must decide whether to develop a sophisticated version of its existing product or enter a new market (the mobile market).
Let's study the Resotech's environment, and propose the different strategies Resotech could make in the immediate term.
Strategies that can be taken by Resotech:
1-Develop the RS-2000 (an improved and sophisticated version of the RS-1000)
The RS 2000 market:
Competition: this technology is difficult for competitors to challenge (needing high expenditures and a very technological R&D with sophisticated technology).
Customers: same as the RS-1000 with high needs. These customers aren't a price sensitive and need a high technology and quality differentiation.
The FDA/Government policy should be taken in consideration because it might change the segments' composition.
→Pros: The company relies on past dependencies and experience for succeeding in this project. It enhances value proposition and secures its leadership position in high-performance, top-quality MR equipment.
In fact Resotech is very performing; however its market share is only 7.2%, which calls for sustaining market position first. It is less risky to improve on a technology than to embark on the development of a new one.
Cash inflows come from high margin contracts.
→Cons: Cash intensive.
Myopia on the mobile segment side; lose potential new clients.
Discard the possibility of developing additional expertise in imaging technology
2-Develop the mobile MR:
The Mobile Market:
Competition: in imaging, the competition is fierce in 1986:
GE (30.6%), Siemens (10.9%),...